Subsidized Fuel Adjustment: Now or Never

Selasa, 05 Februari 2013 | 10:36

The Government only has the first half of this year to capitalize on the momentum of subsidized fuel (BBM) price adjustment.Harry Azhar Azis, the Vice Chairman of Commission XI of the House of Representatives, said entering the semester II/2013, the political risk becomes larger to the price adjustment policy. After that period, the Government almost certainly will not do as the Country is approaching elections.

"After the second semester that the risk is greater, however, during the first half I think it is possible. It is close to the election, the Government is willing to take the risk?" he told Bisnis, Wednesday (30/1).

Harry agreed if the Government immediately makes any price adjustments. He suggested President Susilo Bambang Yudhoyono’s administration could make adjustments at the range of IDR1.500 to IDR2.500 per liter.

The Vice Chairman of Commission XI, Chairman of the House who is also the Head of Budget Noor Supit Ahmadi said the first half of the political situation is in a state conducive to making decisions related to price adjustments.

"Don’t wait for until the [political] ambiance heats up. The automatic impact and stronger political pressure will stress the Government," he said when contacted by Bisnis, Friday (1/2).

However, he added, it does not mean that Parliament can simply take it for granted that price adjustment measures. According to Ahmadi, the increase in fuel prices should be the last step taken by the Government.

Raden Pardede, the Member of the National Economic Committee (KEN), reveals two things that need to be done to keep the current government quota of subsidized fuel, the removal of subsidies for private cars and subsidized fuel price adjustments gradually to the market price. "Subsidy removals for private car segment that covering around 70% [of the total consumption] of fuel subsidy, while motorcycles and public transport remain subsidized," he said.

Meanwhile, the gradual price adjustment will reduce the dependency on subsidies gradually. "The government can consider where the least political cost."

 The Ministry of Energy and Mineral Resources estimates that the realization of subsidized fuel consumption will exceed the quota of up to 49 million kiloliters.

The Director of the Downstream Oil and Gas Ministry of Energy Umi Asngadah said she saw an estimated consumption of subsidized fuel consumption growth in 2011 to 2012 to reach 8%. This figure appears based on the assumption that the economic growth and the number of vehicles remain. Therefore, if the conditions show a similarity this year, the consumption of subsidized fuel this year could reach 49 million KL.

However, that number does not include the government's efforts to reduce consumption figures through the issuance of Ministerial Regulation No.1/2013 regarding the control of fuel usage.

Harry Azhar confirmed the fuel over-quota can no longer be an option this year. According to him, the subsidized fuel over-quota shows that the Government's performance in managing the budget is not in accordance with law. He said the current budget planning related to the fuel subsidy is not healthy.

Bambang Prijambodo, Advisor to the Ministry of Economy and Finance and the National Development Planning (VAT) / Bappenas, said the government basically had suspected that the fuel consumption this year will exceed the quota.

According to him, the number of subsidized fuel quota was set at 46 million kiloliters in Budget 2013 is a political agreement.

In another section, Rofyanto Kurniawan, the Head of Budget Policy Fiscal Policy with the Ministry of Finance, said any reduction in oil lifting of 10,000 barrels/day of making the budget deficit widened by IDR1.1 trillion.

"So if you drop 70,000 barrels/day from the target of lifting 900,000 barrels / day, the risk of additional deficit will be between IDR7trillion to IDR8 trillion," he told Business. (dpr/aph)

by Ana Noviani, Riendy Astria